China’s lending to African countries reached a record $4.61 billion in 2023, the first annual increase in 7 years. The loan provided to African countries by Chinese creditors was more than $10 billion between 2012 and 2018.
These loans were part of President Xi Jinping’s desire to spread Chinese economic interest in the region. However, there was a decline in the numbers due to the 2020 Covid-19 outbreak. As the Chinese economy reopened after the pandemic, the lending began to rise again reaching a three-fold increase in 2023.
According to a study by Boston University’s Global Development Policy Centre, China provided thirteen different loan facilities to eight African countries last year out of which almost $1 billion went to the Nigerian government for the Kaduna-Kano railway project.
China has lent African countries a total of $182.28 billion between 2000 and 2023 with a large chunk of the facility going into infrastructure, energy, transport and ICT sector. According to the Boston University study, about a tenth of these loans went into solar and hydropower projects across Africa.
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The loans have been a subject of debate in and outside Africa as concerns have been raised about the conditions attached. In addition, these loans have been seen by some Western Countries especially the United States as a threat to their interest in Africa.
For some African Countries, China could provide a better loan alternative compared to the terms usually attached to facilities obtained from the IMF or the World Bank. In most cases, these facilities compel countries in Africa to remove subsidy, introduce more taxes and float their currency, leading to a spike in inflation and cost of living crisis.
Analysts have also raised concerns about the loan deals signed with China and what African countries might have to sacrifice to service these debts. The recent controversy between a Chinese company and the Ogun State government of Nigeria also lends credence to this concern. That controversy stemmed from alleged breach of agreements in a 2007 deal between the state government and a Chinese firm. The seizure of presidential jets and the award of over $70 million against Nigeria led to calls for a review of various loan and bilateral agreements signed with China.
The latest data on Chinese lending to Africa comes as African leaders gather in Beijing next week for the Forum on China-Africa Cooperation. Nigeria’s Bola Tinubu will also be attending the forum where he is expected to meet with CEOs of 10 top Chinese corporations, which manage over $3 trillion in assets across sectors such as ICT, oil and gas, aluminum production, seaport development, finance, and satellite technology.
